SmallCaps.us – Mine Development Progress by Partner Companies Shows Tremendous Income Potential for Globex Mining (TSX: GMX)
Growth is considered the Holy Grail for investors. In the junior resource sector, growth often amounts to achieving progress along the development curve for a high quality exploration prospect. As the defined resources expand and the challenges to confirm economic potential are resolved, the intrinsic value of the project increases.
Globex Mining Enterprises Inc. (CA: GMX – $1.40 & US: GLBXF – $1.03 & GER: G1MN – €0.85) has advanced its project generator strategy for many years. The Company may now be seen as a case study for delivering growth in this sector. To review the profile of a winner, simply consider how Globex has achieved growth in the number of high quality properties it controls, along with the expansion of the portfolio of royalty holdings, and the list of partner companies active in the field following successful transactions and option deals. Also consider the growth of the revenue realized by the Company year after year as the value of these transactions also trends higher. And of course the growth in the Globex’s market cap is perhaps the best confirmation of its successful long term strategy.
Several updates were recently presented by partner companies of Globex, in which more advancements were reported. In addition, Globex also announced an exciting property acquisition, addressing the priority to sustain the pipeline of exploration prospects that can provide growth in the years ahead.
Radisson Presents Robust PEA Study for O’Brien Gold Project with Positive Implications for Globex
This month, Radisson Mining Resources Inc [RDS-V] presented the results for a Preliminary Economic Assessment [PEA] that was completed for the advanced O’Brien gold deposit in Quebec. The evaluation considered a number of parameters for a proposed mine development. A plan was modeled for an 11-year mine life to process at least 740,000 ounces of contained gold resources. This would generate roughly 640,000 of gold production assuming 87% recovery efficiency for the proposed processing plant design. Of the resource zones included within this study, about 22% would be extracted from within property claims for which Globex retains royalty leverage.
There are many unknowns to be considered in a full spectrum of outcomes related to development for O’Brien. It is not unusual that some gold resource zones remain unmined even at the eventual closure of a successful mining project. On the other hand, it is also not unusual that additional gold zones may be discovered as development progresses such that a larger overall gold resource could be mined. Also, the variances in the actual price of gold itself would impact the value of the recurring royalty payable to Globex in the event that a producing mine is established over many years of operations. But we can build an estimate for the potential upside in this proposed development to illustrate the value for Globex shareholders.
Assume the full projected resources of the PEA are extracted, with the 2% Net Smelter Royalty payable on 22% of that output. This would compute to a royalty representing approximately 2,846 ounces of gold over an 11-year term. Even if gold holds steady in the $3300 range during that mine life, the total royalty payable to Globex from O/Brien would amount to almost $9.4 million. Success for Radisson therefore translates to enormous upside for Globex.
Encouraging Progress Updates Issued by Globex Transaction Partner Companies
Royalty partner Emperor Metals Inc [AUOZ-CSE] also presented the results of a study reporting a compliant resource update that has potential upside implications for Globex shareholders. Emperor has been active for several quarters to complete drilling programs at the Duquesne West project. New discovery zones were reported with wide intervals of attractive gold values. Historic gold resources were confirmed and included within the resource estimate.
Overall, Emperor was able to document more than 1.46 million ounces of gold at Duquesne West. Roughly 44% of the total estimated gold resources would be available for the lower cost open-pit mining and the remainder to be considered for underground development options. Globex controls 50% ownership of Duparquet Partners, which receives cash and share option payments from Emperor Metals and retains a GMR on the project.
Also, option partner Antimony Resources Corp [ATMY-CSE] issued an update on recently completed exploration for the Bald Hill antimony project in New Brunswick. The first phase of drilling work involved 16 drill holes for a total 3150m of wide diameter drill core. Massive stibnite or stibnite-bearing breccias were encountered in 70% of these drill holes. Stibnite is a primary mineral of antimony.
The program has confirmed a mineralized strike length extending 400m which remains open for further expansion both laterally and to depth. Over 1500 samples have been selected and submitted for assay. Earlier this month, ATMC reported an encouraging initial batch of assay results from the first samples with values up to 28.8% stibnite. Globex retains a 3.5% Gross Metals Royalty on the project.
New Exploration Property Acquired in Arizona through Staking Program
A superb portfolio of high quality properties has provided the foundation for the project generator strategy that Globex has so successfully employed. This diversified suite of exploration properties provides leverage to various minerals and exotic elements. Globex has demonstrated the capacity to acquire attractive projects at the lower end of the cost range, often through staking programs. Thereafter the Company may arrange lucrative option deals and partnership opportunities that lock in capital gains and royalty leverage.
This week, Globex announced its latest property acquisition. A package of land claims in Arizona was assembled through staking, located within the famous historic Gold Basin mining district. A total of 24 land claims comprise the West Block, while the East Block includes 16 claims. The claims were selected to enable exploration potential based on previously identified gold showings within the property area. There is also a record of historical gold mining that was active on the project area, further validating the potential for new discovery. The total property area of both claims blocks is 334.45 hectares.
Open cut followed by a 5m deep drift at Gold Hill mine
Intermittent mining activity was carried out within the property at several locations by previous operators, with most gold production occurring prior to 1930. Average grades above 20 grams per ton gold were frequently reported although limited data is available. Active mining continued on a smaller scale until 1942. Some limited placer mining has also been documented in more recent years. The presence of historical mine workings certainly add to the appeal for this project.
Underground workings at Gold Hill mine
However, Globex completed recent surface sampling work that included grab samples from historic mine workings, chip samples from outcrop and limited soil sampling programs.
High-grade assay results of vein and stockwork mineralization found in the West Claim Block include grab sample B-1 with 17.8 g/t Au & 0.13% Cu, mine dump grab sample B-6 with 16.2 g/t Au & 0.36% Cu, linear chip sample B-8 over 1.05 m width (quartz stockwork) with 18 g/t Au and 0.09% Cu, mine dump grab sample B-29 with 25.6 g/t Au and 0.17% Cu, linear chip sample B-47 over 0.85 m width (quartz stockwork) with 4.99 g/t Au, linear chip sample B-68 over 0.8 m width (stockwork) with 3.56 g/t Au and channel sample B-34 over 1.0 m width with 4.85 g/t Au.
On the East Block, sample B-123, a linear chip sample over 1.5 m horizontal width of a massive quartz vein, returned 8.55 g/t Au. Linear chip sample B-107 collected from the NW-SE trending Central vein system assayed 49.27 g/t Au, over a true vein width of 0.9 m, the highest grade from the entire Salt Spring project. Also, a mine dump grab sample B-93 from the Central Mine returned 11.3 g/t Au.
Although grab samples are always selective by nature, a comprehensive exploration effort is certainly warranted based on these results.
Conclusion
The value proposition for the Globex portfolio of royalty assets is a significant component to the further upside for this Company. Progress towards development of the O’Brien gold deposit as outlined by Radisson provides some measure of this potential. Consider that Radisson has been active for many years with exploration and other work programs to advance the project. If a producing gold mine is successfully developed, Globex will gain leverage to a significant royalty income stream without having directly contributed or funded this work. Meanwhile, the O’Brien project represents just one of many royalty holdings controlled by Globex and it is entirely possible that several others will eventually become producing mines and provide additional income to the Company.
The value of royalty leverage is enhanced by the efforts of ambitious partner companies. Emperor and Antimony Resources are following the same path towards success that was employed by Radisson. These junior explorers participate in effective exploration activity to build resources and advance projects. Emperor has already achieved significant growth in the compliant gold resources at Duquesne West, while ATMC delivered wide intervals of stibnite in its first drilling program. With the promising sampling results reported by Globex at the new Arizona claims groups, the Company will have the opportunity to attract another quality partner and repeat the process with this latest acquisition. Smallcaps Recommendation: BUY.
Related Posts
Tags
Share This
